The Role of the Not-for-Profit Sector

Transcription

1 The Role of the Not-for-Profit Sector AER Committee on Social Cohesion, Social Affairs and Public Health Vrsac, 27 March 2006 Paul Atkinson Senior Fellow Groupe d'economie Mondiale GEM de Sciences Po 197, boulevard Saint-Germain PARIS

2 I Introduction Not-for-profit sector large and heterogeneous collection of organizations. Charitable foundations to sports clubs and soup kitchens. We know little about them, especially in Europe. According to the European Commission it operates in what amounts, at least in strategic terms, to a policy vacuum. 2

3 II Overview of the Not-for-Profit Sector What is the not-for-profit sector? How is it financed? Why is it Important? 3

4 What is the Not-for-Profit Sector? Not households, businesses, persons or the state. Private, philanthropic or operate otherwise on a non-commercial basis. Johns Hopkins/ UN Statistics: Features include (1) Formality; (2) Private; (3) Nonprofit distribution; (4) Self-governing; (5) Voluntary. 4

5 How is it Funded? Table 1: Sources of funding of non-profit organizations Developed countries (per cent of total) Developing and Transition countries All 32 countries Total Financial Resources Fees Government Philanthropy Total Total Organizational Support (including volunteers) Fees Government Philanthropy Total * * Subtotals do not add to 100 due to rounding. Source: Johns Hopkins Comparative Nonprofit Sector Project 5

6 Why is it important? (1) It is big. Operating expenditures in 37 countries average more than 5% of GDP. $1.6 trillion (2002 US dollars); about the same as UK GDP. Paid employment is 4.7% of the workforce in developed countries. Volunteers add another 2.7% on a fulltime equivalent basis. 6

7 (2) It fills important gaps between state and market. Delivers social services Addresses neglected problems Performs advocacy role, calls attention to new issues Infrastructure for artistic, religious, cultural, recreational, political and humanitarian activities. 7

8 3) As European ageing proceeds 8

9 budget pressures may increase these gaps. OECD Study Without change, pension spending to rise by 6% of GDP in EU by Savings in other areas mixed but many will require political courage. Table 2: Projected changes in age-related public spending, (per cent of GDP) Old age pension with Other [1] Total existing generosity Austria Belgium Czech Republic Denmark Finland France [2] Germany Hungary Italy Netherlands Poland Spain Sweden United Kingdom Average of above EU countries Average of OECD cou ntries [3] [1] Assumed changes in pension generosity; changes in employment performance; medical and long term care costs; education expenses; family allowances. [2] 2040 [3] 14 EU countries pabove plus Australia, Canada, Japan, Korea New Zealand, Norway, United States Source: Dang, Thai Than; P. Antolin; and H. Oxley. " Fiscal Implications of Ageing: Projections of Age-related Spending; OECD Economics Department Working Paper 305, Paris,

10 (4) Mobilizing older volunteers can add to potential output. The ageing challenge is not just budgetary. It is also to mobilize real resources Older retirees have time, skills and competences to contribute if mobilized. 10

11 First priority is to sustain gainful employment of 55+ age group. Table 3: Employment rates, 2004 (employment as a percentage of population) Age Group EU 19 [1] o/w Germany France Italy Sweden United Kingdom United States Japan [1] EU15 plus Poland, Hungary, Czech and Slovak Republics Source: OECD Employment Outlook,

12 Potential from volunteering alone is significant. Could add as much as 3-5% to the effective active workforce Table 4 Potential Impact of Retiree Volunteering on the Effective Active EU Population Paid employment plus volunteers measured in FTEs (millions) Case 1: No volunteers over 80. No change in volunteering behavior Widespread volunteering of 1 day per week by age group Impact of higher volunteering (per cent) Case 2: No age limit on volunteers No change in volunteering behavior Widespread volunteering of 1 day per week by age group Impact of higher volunteering (per cent) NOTE: "Widespread" volunteering implies a participation rate at average rates for Sweden and the UK, where volunteering rates are among the highest in the EU. Source: Author's calculations, available on request. 12

13 (5) Volunteering is good for health and well-being. Involves physical exercise, purposeful activity, and social interaction. Emerging literature in medical and gerontology fields. Elderly and socially excluded benefit most. 13

14 III How can we take advantage of the sector s potential? Mobilize private resources Activities where the sector s contribution could be high What can be done at national and EU levels? and at regional and local levels? A word of caution 14

15 Mobilize private resources Fees, subscriptions and trading income perhaps limited Philanthropy gifts, donations, volunteering -- has potential in many countries Public-private partnerships experimental but worth exploring 15

16 16

17 Activities where the sector s contribution could be high Countries will have different attitudes about where activity by not-for profit organizations is appropriate. Concrete examples illustrate some possibilites. Consider France. 17

18 Table 6 The contribution of non-profit organizations to the economy FRANCE, 2002 Activity Group Employment Value added Gross production ('000s, end-year) (EUR billion) (EUR billion) Arts, sport and culture Teaching and research Health Social services Economic activities Advocacy Total Non-profit sector (2.9% of GDP) Source: Philippe Kaminski: Les associations en France et leur contribution au PIB INSEE, Paris, February

19 Table 7 Contribution of non-profit organizations to teaching and research FRANCE, 2002 Activity sub-group Employment Value added Gross production ('000s at end-year) (EUR billion) (EUR billion) Teaching, primary and secondary Teaching, higher level (5.7% of total) (1.2% of total) 0.8 Other teaching (5.5% of total) 3.7 Research (1.7% of total) 1.1 Total high level teaching and research (2.9% of total) 1.9 Source; Philippe Kaminski: Les associations en France et leur contribution au PIB INSEE, Paris, February

20 Table 8 Shanghai Jiao Tong Ranking of Top World Universities World rank Institution Endowment, 30 June 2004 ($ per student) 1 Harvard 1.1 million 2 Stanford Cambridge (UK) 4 California, Berkeley 5 Mass. Inst of Tech Cal. Inst of Tech. 7 Princeton 1.45 million 8 Oxford (UK) 9 Columbia Chicago Yale 1.1 million 12 Cornell California, San Diego 14 Tokyo (Japan) 15 Pennsylvania Source: Institute of Higher Education, Shanghai Jiao Tong University, Williams College Alumni Relations and Development,

21 What can be done at national and EU levels? Favorable tax treatment Inheritances, estates and succession Facilitate cross-border philanthropy and activities Identify and address barriers to mobilizing volunteers and employment of retirees with a voluntary element 21

22 and at regional and local levels? Community based philanthropic mechanisms Simplify regulatory arrangements and administration Develop training for management of volunteers Leverage resources through partnerships 22

23 A word of caution: avoid uncritical cheerleading Social enterprises, charities and non-profits are attractive to skeptics of both the state and profit-driven business. Not-for--profits do not face electoral or market tests. Insist on mechanisms to ensure legitimacy, accountability and effectiveness of resource use. 23